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Posted By JC7 on 04/23/2012 8:45 AM
Can anyone tell me how the Auditor comues us with the Due to/from account total? I've posted before our HOA is in a unique situation instead of Operating owing Replacement fund (reserves) it's the opposite. Now I understand that would mean at some point money was spent from operating for a reserve item and now needs to pay back the operating account.
JC, the balance would be the way you understand it.
Another way to look at it:
Amount budgeted to Reserves
less reserve expenses paid by operating fund
plus reserve funds transferred to operating for reserve expenses
= (if negative number - reserves still owes operating fund)
= (if positive number - operating fund still owes Reserves)
= (if zero - budget obligation met)
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Posted By JC7 on 04/23/2012 8:45 AM
Looking back at the past Audits (from 2007 to present) there has always been this amount due in the same manner the only difference is each year the number is larger. Would I be correct in assuming that number has risen over the years because the adjustments for some reason were never done?
Sounds like a logical possibility
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Posted By JC7 on 04/23/2012 8:45 AM
If this is true would it also mean our books have not been balanced each year therefore explaining why our PM is not reporting the correct reserve fund balances?
No.
The accounting world doesn't care if the money is in an operating account, reserve account or under your mattress. The accounting world just needs to identify that the money is properly accounted for.
As long as the income received (assessments/interest) is properly credited and matches what is in the bank and/or under the mattress and the expenditures all have receipts that were required to be paid by the Association, then it's likely that the accounts balance even if x dollars in the operating fund belongs to the reserves (or the other way around).
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Posted By JC7 on 04/23/2012 8:45 AM
Because this number has risen to over 200K and unfortunatley this is my first year serving the on the board I feel the need to fix it so we can balance right?
It would certainly make it easier to understand if the bank balances matched what the CPA said.
Additionally, there may be other advantages to this as well.
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Posted By JC7 on 04/23/2012 8:45 AM
We can pay back the operating fund but our money is tied up in investments. The accountant suggested we move a couple bonds to operating fund so we can balance. Went I looked back at the 2007 audit the amount was $103,781 now it's $208K.
If you don't require the funds in your operating account, another option would be for the board to make an additional contribution to the Reserves in the amount the reserves owes the operating fund.
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Posted By JC7 on 04/23/2012 8:45 AM
I thought I could find what the money was spent on by looking at the GL transactions and there was nothing that stood out other than typical operating expenses. Is there somewhere else I should be looking to see what this money was spent on? I really just don't get it any help would be great and thanks for your patience.
Without seeing the actual documents it's difficult to offer advice on that question.
You might try looking at the Reserve study to identify what should have been covered by reserves. Then look for expenditures made toward those items. Depending how the reserve study is written, snow removal might be counted as road maintenance (I wouldn't but it's possible) and therefore charged as a reserve item. Just a guess.
Tim